The only way is mobile - Google and Facebook results prove that
Andrew Newman, director - European operations and analytics, Rocket Fuel on how tech titans are leveraging mobile to boost results
This week Facebook will be releasing its third quarter results and I think we could be in for a shock when it is revealed just how much revenue is coming from mobile advertising. With 73% of Facebook traffic now coming from mobile devices and Google announcing last week that 40% of YouTube traffic is from mobile devices, it’s clear that advertisers have taken advantage of the opportunities arising from mobile social sites. However, I think there is still more that can be done.
Why has YouTube and Facebook advertising proved so successful?
Many cynics thought Google would never be able to monetise YouTube. However, users haven’t rejected pre-roll ads as expected, and ad revenues have increased 75%. Surely a big part of these results comes from the opportunities that programmatic buying is providing to advertisers. Programmatic buying allows advertisers to use big data analytics and algorithms to inform who an ad should be served to.
YouTube enabled the bulk of its video inventory for programmatic buying in 2011, which means companies like Rocket Fuel can now bid on ad inventory in real time in order to reach relevant customers.
How this works:
Different kinds of data work together to build a rich picture of the ideal customer, ensuring that the right ad is served to the right person, at the right time. This data could include demographic and psychographic consumer data, combined with behavioural data such as sites visited, as well as contextual data such as the weather or the time of day.
Facebook revealed earlier this year that 41% of their ad revenue now comes from mobile devices, and this is expected to increase when results are announced this week. Initially, when the social site went public, there was a lot of criticism for it being far too reliant on traffic from mobile devices, and not turning this into a monetised opportunity. Since then the Facebook Exchange advertising platform has enabled advertisers to programmatically serve ads that feel non-invasive and anonymous, yet extraordinarily relevant.
Facebook has also launched Newsfeed advertising, which I think is particularly clever. They’re charging per insertion, instead of per impression. The ads are persistent in the users’ feed, and all their friends will see them also. There’s a principle called “homophily” that guides a lot of social advertising, and the basic idea is that your friends will be interested in the same products as you. Facebook leverages this concept without impacting on a user’s privacy.
What is next for YouTube and Facebook advertising?
I’m absolutely certain that we will continue to see an increase in the level of advertising spend on social sites. For YouTube I believe the success of advertisements will come down to the creatives, providing several options so that the relevant message can be programmatically served to the right audience. The development of engaging video advertisements that work well on mobile will play a huge part in maintaining a compelling user experience. As more and more advertisers begin using programmatic buying for mobile video, the user experience will continue to improve.
One of the next steps for Facebook has to be the introduction of in-app advertisements. When this happens it will have to be exceedingly careful not to aggravate its users by bombarding them with irrelevant ads. If Facebook is able to use the lessons it has learned through the launch of display and newsfeed ads, then I’m sure in-app advertising will provide great opportunities for advertisers and Facebook alike.
Andrew Newman is director, European operations and analytics at Rocket Fuel